Bitcoin is now trading well above $20,000, and at this point will never again see under five-digits. And although the clean break of $20,000 was proof enough that a massive bull run was here, the Relative Strength Index has also breached into bull territory for the first time since 2018.
Comparing past crypto market cycles, Bitcoin is already far more bullish this time around than it was back in 2017. That rally took the crypto asset from $1,000 to $20,000. And if things are more bullish already, could this peak be even higher than what the past cycle’s trajectory would suggest?
Beast Mode: Relative Strength Index Reading Reaches Bull Market Level
Today is December 17, 2020, three full years after Bitcoin topped out in 2017 after becoming a household name. That year alone, the leading cryptocurrency by market cap spiked from $1,000 to over $20,000.
It is only fitting that on the anniversary of the previous peak, Bitcoin price has breached above $20,000 to set a new record. And if that signal wasn’t enough to let the world know another bull run has begun, the asset’s Relative Strength Index is yet another important indicator that magic is about to happen.
For the first time since the bear market began, the monthly RSI is well into bull territory. Looking back at past cycles in the chart below, each checkmark highlights where this milestone condition was met.
The cryptocurrency is nearly at a point relative to the last cycle that led to one of the first and only red monthly candle closes. That took place in December 2016.
December is an important month for the cryptocurrency cyclically, acting as an important pivot point for price action.
The leading cryptocurrency by market cap broke into the RSI bull zone but is slightly ahead compared to the last cycle | Source: BTCUSD on TradingView.com
Bitcoin Bubbles: Current Cycle More Bullish Than The Last, Ahead By 6 Months
Bitcoin’s “bubble” cycles are explained to be due to the asset’s unique block reward mechanism and scarce supply. The idea is that unlike gold and other commodities that, rather than increasing production and therefore supply when demand grows, Bitcoin actually slashes supply further.
The gold industry scrambling to meet this year’s demand by increasing the available supply caused precious metal momentum to taper. Because there can only ever be 21 million BTC, and its release into the market is controlled by unmodifiable computer code, this process can’t impact prices.
Instead, Bitcoin price rises exponentially and the asset enters price discovery until speculation exceeds utility, and the bubble pops and the cycle begins again.
Paying close attention to these market cycles in the cryptocurrency has been the key to predicting what might to expect in the future of Bitcoin cycles.
The four-year intervals make these cycles somewhat predictable, and nearly right on target, the bull market is back again. If the cycle continues to follow the same path as the last time around, the parabolic phase and unimaginable prices are next.
However, there is one thing to worry about for bulls, and that’s the fact that this cycle is actually more bullish than the last. Being substantially more bullish and ahead in terms of market cycle can’t be a bad thing for the cryptocurrency that just caught the attention of billionaires around the world.
But it does also point out the fact that things could be slightly overextended currently compared to what little data is available to go by. The above chart also demonstrates that Bitcoin could be as far as six months ahead of where it was during the last cycle.
With so few cycles to compare, there’s no telling what might happen, especially with unique factors this time around such as unprecedented money printing, and FOMO from billionaires with more than enough capital to throw around.
Featured Image From Deposit Photos, Chart From TradingView.com